Chilean Currency Bears Unwind Bets by $1.1 Billion Over Two Days

International investors reduced
their bets against the peso by $1.1 billion in two days to the
lowest level in a month on Nov. 19, according to data published
today by the central bank.

The peso was little changed at 477.95 per dollar at the
close of trading in Santiago. International investors in the
Chilean peso forwards market reduced their short position to $8
billion Nov. 19 from $9.1 billion Nov. 15. Chile’s two-year swap
rate was 5.08 percent today, compared with 5 percent at the end
of last week.

Investors reduced bets against the peso after Chile’s
central bank reported Nov. 19 that gross domestic product beat
expectations in the third quarter, expanding 5.7 percent from a
year earlier. The median forecast of economists in a survey by
Bloomberg was for a 5.4 percent increase.

“Offshore investors were long dollars, betting the peso
would go to 490, but that didn’t happen and then we got the
economic data,” said Eugenio Cortes, the head of currency
forwards at EuroAmerica Corredores de Bolsa SA. “So they
unwound that bet, which accounts for the flows we saw.” A long
is a bet an asset may gain in value.

The peso has rallied 1.4 percent since Nov. 16, the best
performance among major Latin America currencies, rebounding
from a 16-week low of 484.79 per dollar. The peso has advanced
8.7 percent in 2012, the biggest gain worldwide after the
Hungarian forint.